Looking ahead for 2023
Talk of recession, war and political upheaval have punctuated 2022, but as leading figures say, there is still reason to feel positive in the coming 12 months
TOM GITTINS, MANAGING DIRECTOR, CONFEX
The wholesale industry seems to be back on an even keel post-pandemic and 2023 looks set to be a year of consolidation and growth through acquisition. The UK food supply chain has been truly tested over the past three years and this has led to a desire to simplify the manufacturer-to-consumer journey in order to maximise both supply and distribution efficiency.
Understanding your customer has always been a great strength of wholesalers, but younger consumers now have very different needs. Sustainability and ethics are more important to Gen Z than price, and wholesalers must ensure they have strong credentials when it comes to their carbon footprint (both up and downstream).
Those wholesalers who embrace change and invest in the changing consumer landscape will win. The key will be to always focus on the customer while being as efficient as possible and keeping the finger on the pulse to be able to adapt to market changes. I have no doubt that the wholesale channel will rise to the occasion.”
JOHN KINNEY, MANAGING DIRECTOR, UNITAS WHOLESALE
I expect retailers to shop around and trade down to meet their consumers’ budgets and value requirements. However, retail is likely to be more resilient to recession as consumers will shop local as well as little and often. A value proposition, PMPs and promotions will be critical to meet this value need. Retailers will also be purchasing on a little and often model, so keep pack sizes appropriate. PMPs will be more important than ever but need to ensure they provide an appropriate margin.
In a recession, hospitality will be a challenge, so over time we may see a move towards cheaper brands.
Outlets that provide a value offering while maintaining quality will benefit but will need a clever approach to building a menu such as wise use of ingredients or less technical dishes so less qualified staff can be employed to reduce costs.”
TANYA PEPIN, MANAGING DIRECTOR, TWC
We’d summarise what to expect in wholesale in 2023 in just three words: supply, staffing and sales.
We are expecting supply to continue to be disrupted as the war in Ukraine and the implications of Brexit continue to have an impact. Supply disruption will affect range, pricing and promotions.
Staff are likely to demand wage rises given the increasing gap between wage growth and the cost of living. Businesses are facing rising costs across the board and so the majority are not going to be able to respond positively to these demands, which is likely to lead to dissatisfaction and, ultimately, staff shortages.
In terms of sales, volumes, which so far have held up reasonably well, will fall due to the cost of living crisis.
So, where are the opportunities? What we have seen in the past is that convenience stores generally hold up well in recessions. ‘Little and often’ shopping minimises waste and as long as retailers have a strong value proposition, they can prosper in times of economic hardship.
We are seeing hospitality occasions dropping slightly and it is doubtless that the value end of the market will hold up better as consumers reduce spend on eating out. Operators will call on their entrepreneurial spirit and resilience, which has been necessary through the permacrisis of the past few years.”
GARY MULLINEUX, MANAGING DIRECTOR, CATERFORCE
As we enter 2023 in recession, many smaller wholesalers will struggle with difficult trading conditions and Caterforce continues to support FWD in its lobbying of the government for additional support. The impact of price rises will result in fierce competition to attract consumer spend, but I believe that when times are tough, affordable luxuries, such as eating out, are still within reach for consumers.
Suppliers need to invest in marketing initiatives to grab customers’ attention and ensure their product cuts through the noise.
I expect to see a renewed focus on buying local, which will benefit our members, all of whom support regional independent foodservice businesses. As per the recent statement from the Bank of England, the second half of 2023 should bring more stability and a significant drop in inflation as energy price rises level out and the supply issues ease.”
YULIA PETITT, HEAD OF COMMERCIAL & MARKETING, SUGRO
Consumers’ savvy approach will continue throughout 2023, which is where the importance of promotions and value-for-money offers comes into play. Consumers will be more willing to switch brands and go for less-expensive options.
It’s likely we’ll see some reduction in out-of-home consumption, which represents an opportunity for wholesalers to drive growth via big night in sharing occasions. Price-marked packs, multipacks and sharing formats across all categories provide a huge opportunity to drive a value-for-money offering for consumers.
I would also anticipate an increased demand on canned goods. With food inflation continuing to soar, canned goods offer a lower-cost alternative with a longer shelf life.
We will certainly see more attempts from both suppliers and wholesalers to manage the increased inflation level by cutting costs through supply chain optimisation and taking advantage of automation.
When making purchasing decisions, many customers want to know about the sustainability efforts made by the wholesaler and manufacturer. By looking at ways of improving sustainability, wholesalers and manufacturers will give customers a reason to purchase.”Caterforce Confex Gary Mullineux John Kinney Sugro Tanya Pepin Tom Gittins TWC Unitas Wholesale Yulia Petitt